Buffett Buys 2 Stocks, Adds To Chevron Stake In 3rd Quarter

Summary

• Guru entered positions in Royalty Pharma and Floor & Decor Holdings.
• He sold out of Merck, Liberty Global and Organon.
• The Charter Communications stake was also pared back.

Warren Buffett (Trades, Portfolio)’s multibillion-dollar conglomerate, Berkshire Hathaway Inc. (BRK.A, Financial)(BRK.B, Financial), disclosed its equity portfolio for the third quarter of 2021 on Monday.

Despite having around $149.2 billion to spend on stocks, the renowned guru and his two portfolio managers, Ted Weschler and Todd Combs,only entered two new positions, which were in Royalty Pharma PLC (RPRX, Financial) and Floor & Décor Holdings Inc. (FND, Financial). They also added to the Chevron Corp. (CVX, Financial) stake.

In contrast, the value investor was a fairly active seller, paring back seven positions and completely divesting of three stocks. In addition to completely eliminating its stakes in Merck & Co. Inc. (MRK, Financial), Liberty Global PLC (LBTYK, Financial) and Organon & Co. (OGN, Financial), the firm trimmed its Charter Communications Inc. (CHTR, Financial), AbbVie Inc. (ABBV, Financial) and Bristol-Myers Squibb Co.  (BMY, Financial) holdings.

Berkshire’s five largest holdings, accounting for over half of the equity portfolio, are Apple Inc. (AAPL, Financial), Bank of America Corp. (BAC, Financial), American Express Co. (AXP, Financial), The Coca-Cola Co. (KO, Financial) and Kraft Heinz Co. (KHC, Financial).

The guru’s $293.45 billion equity portfolio consisted of 43 stocks as of Sept. 30. A majority of the portfolio was invested in technology stocks at 44.44%, while the financial services sector has a weight of 32.11% and the consumer defensive space represents 12.12%.

Royalty Pharma

The guru disclosed a 13.15 million-share investment in Royalty Pharma (RPRX, Financial), dedicating 0.16% of the equity portfolio to the stake. The stock traded for an average price of $38.92 per share during the quarter.

The New York-based company, which buys biopharmaceutical royalties and funds innovation across the industry, has a $17.91 billion market cap; its shares were trading around $41.70 on Monday with a price-earnings ratio of 16.76, a price-book ratio of 3.11 and a price-sales ratio of 8.78.

Since its initial public offering in June 2020, the stock has fallen over 5%.

Floor & Décor Holdings

Buffett invested in 816,863 shares of Floor & Décor Holdings (FND, Financial), allocating 0.03% of the equity portfolio to the position. Shares traded for an average price of $119.21 each during the quarter.

The retailer of hard surface flooring and related accessories, which is headquartered n Atlanta, has a market cap of $13.73 billion; its shares were trading around $130 on Monday with a price-earnings ratio of 47.98, a price-book ratio of 10.86 and a price-sales ratio of 4.3.

The GF Value Line suggests the stock is significantly overvalued based on its historical ratios, past performance and future earnings projections.

Chevron

With an impact of 0.19% on the equity portfolio, the investor boosted the Chevron (CVX, Financial) stake by 24.13%, buying 5.6 million shares. During the quarter, the stock traded for an average per-share price of $99.81.

He now holds 28.7 million shares total, accounting for 0.99% of the equity portfolio. GuruFocus estimates he has gained 27.42% on the investment so far.

The San Ramon, California-based energy giant has a $225.19 billion market cap; its shares were trading around $116.82 on Monday with a price-earnings ratio of 22.56, a price-book ratio of 1.65 and a price-sales ratio of 1.66.

According to the GF Value Line, the stock is fairly valued currently.

Merck

Impacting the equity portfolio by -0.24%, the Berkshire leader sold all 9.16 million shares of Merck (MRK, Financial). During the quarter, the stock traded for an average price of $76.11 per share.

GuruFocus data shows he lost an estimated 6.92% on the investment since establishing it in the third quarter of 2020.

The pharmaceutical company, which is headquartered in Kenilworth, New Jersey, has a market cap of $211.40 billion; its shares were trading around $83.69 on Monday with a price-earnings ratio of 29.57, a price-book ratio of 5.89 and a price-sales ratio of 3.95.

Based on the GF Value Line, the stock appears to be fairly valued currently.

Liberty Global

The Oracle of Omaha dumped his 1.8 million remaining shares of Liberty Global (LBTYK, Financial), impacting the equity portfolio by -0.02%. Shares traded for an average of $27.77 each during the quarter.

According to GuruFocus, the firm has lost an estimated 14.48% on the investment over its extended lifetime.

The British telecommunications company has a market cap of $15.82 billion; its shares were trading around $29.14 on Monday with a price-earnings ratio of 1.41, a price-book ratio of 0.62 and a price-sales ratio of 1.36.

The GF Value Line suggests the stock is fairly valued currently.

Organon

After disclosing a 1.55 million-share investment in Organon (OGN, Financial) in the second quarter, Buffett sold out of the stock. The transaction had an impact of -0.02% on the equity portfolio. The stock traded for an average per-share price of $32.03 during the quarter.

GuruFocus says he lost an estimated 2.92% on the short-lived investment.

The New Jersey-based pharmaceutical company, which was spun off of Merck in May, has an $8.46 billion market cap; its shares were trading around $$33.38 on Monday with a price-earnings ratio of 10.24 and a price-sales ratio of 2.72.

Since being spun off, the stock has risen around 0.4%.

Charter Communications

In the largest transaction of the quarter with a -0.25% impact, the guru reduced the Charter Communications (CHTR, Financial) stock by 19.43%, selling 1.01 million shares. The stock traded for an average per-share price of $759.13 during the quarter.

He now holds 4.2 million shares, representing 1.04% of the equity portfolio. Buffett has gained an estimated 195.62% on the investment so far.

The telecom company, which is headquartered in Stamford, Connecticut, has a market cap of $124.23 billion; its shares were trading around $692.91 on Monday with a price-earnings ratio of 31.56, a price-book ratio of 7.29 and a price-sales ratio of 2.7.

According to the GF Value Line, the stock is fairly valued.

AbbVie

Trimming the holding by 29.86%, Buffett sold 6.13 million shares of AbbVie (ABBV, Financial), impacting the equity portfolio by -0.24%. During the quarter, the stock traded for an average price of $114.24 per share.

The guru now holds 14.4 million shares total, which make up 0.53% of the equity portfolio. GuruFocus estimates he has gained 21.43% on the investment over its lifetime.

The Lake Bluff, Illinois-based biopharmaceutical company has a $206.56 billion market cap; its shares were trading around $116.84 on Monday with a price-earnings ratio of 27.82, a price-book ratio of 15.26 and a price-sales ratio of 3.77.

Based on the GF Value Line, the stock appears to be fairly valued currently.

Bristol-Myers Squibb

Impacting the equity portfolio by -0.10%, the investor trimmed the Bristol-Myers Squibb (BMY, Financial) take by 16.15%, selling 4.24 million shares. During the quarter, the stock traded for an average price of $65.87 per share.

The investor now holds 22.04 million shares total, which represent 0.44% of the equity portfolio. GuruFocus data shows he has gained around 1.78% on the investment, which was established in the third quarter of 2020.

The pharmaceutical company headquartered in New York has a market cap of $132.34 billion; its shares were trading around $59.62 on Monday with a price-book ratio of 3.56 and a price-sales ratio of 2.95.

The GF Value Line suggests the stock is modestly undervalued currently.

View all of Buffett’s trades here.

Disclosures

I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

The views of this author are solely their own opinion and are not endorsed or guaranteed by GuruFocus.com.